1 general management concepts

Diploma in Quality Management Module 2

General Management Concepts

GENERAL MANAGEMENT CONCEPTS

SRI LANKA STANDARDS INSTITUTIONTraining Division

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GENERAL MANAGEMENT CONCEPTS

TEXT BOOKS RECOMMENDED

1. Management by Helleregal and Slocum – Published by Addition Wesley, Massachussets. 2. Contemporary Management by David R Hampton – Published by McGraw Hill Book Co., 3. Manager Revolution by Hatekeyama – Published by Stanford Productivity Press.4. The Versatile Manager by Blake and Mouton – Published by Richard D Irsin Inc., 5. Organizational Behaviour by Fred Luthans – Published by Mcgraw-Hill International.

WHAT IS MANAGEMENT?

There are various definitions proposed for the term. For example,

“Management consists of getting things done through others. A manager is one who accomplishes objectives by directing the efforts of others”

“Management is designing and maintaining an environment in which individuals working together in groups can accomplish objectives”

“Management is the primary force within an organization which co-ordinates the activities of its sub-systems and relates them to the environment”


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“Management is the work involved in combining and directing the use of resources to achieve a particular purpose”

There are more definitions proposed; but it is evident that the primary aim of these definitions is to support a given approach to Management. The presence of so many definitions also suggests that it is difficult to define Management comprehensively by a few short sentences. However everybody agrees

that “Management” is a process undertaken by a superior to achieve organizational objectives with minimum financial, human and other resources.

Therefore the need for Management arises with the basic economic principle of Scarcity of resources and optimizing efficiency.

HISTORICAL BACKGROUND

Management as seen today has developed over a period of time, which can be broadly classified into

five concept-based periods Pre-industrial Period Management by Classical approach Management by Behavioral approach


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Management by System approach Management by Contingency approach

Pre-Industrial Period

The Pre-industrial era differs primarily from the industrial era by the fact that the mass production came into being only during the Industrial Era. During the Pre-industrial era products were rather made item by item than manufactured.

An individual had the pride of completing whole task of designing, making and

finishing. There was hardly any division of labour. Craftsmanship went

from father to son and remained in the family. The motivational forces or stimuli were different from those present today. Because of that the Management techniques had paternal appeal and primarily had “Carro and Stick” approach.

Scientific Management

Scientific management came after the Industrial revolution and was a result of advancement in technology, mass production and standardization.

Frederick Taylor (1856-1915) is considered to be the father of Scientific Management. He was an Engineer who studied the work of unskilled

and skilled labourers basically and came up with the idea that “there is one best way of doing a job”. He proposed that the conflict between workers and management is due to

inefficient use of resources. He said that workers can be


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motivated by money and thereby increase productivity. The concept of “economic man” was thus evolved and wages

were designed on piece rate basis. Taylor was the first person to promote the idea of increase in profit through increase in productivity.

Taylor’s principle can be summarized as follows;

Work simplification Works norms and standards Working methods and “one best way of doing a

job” Proper selection of workers Training of workers to work in the best way Reward on piece rate basis Defined responsibilities among workers and

managers

These principles brought about following changes

Division of labour Division of task and specialization Financial Incentives or rewards for hard work Pride taken away from master craftsman


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Reduce bargaining power of the master craftsman

Increased work force Migration of work force

Taylor was probably the first person to propose the feasibility of profit increase through higher productivity rather than minimizing costs. Subsequent to Taylor several other researches on Scientific management proposed new concepts on the subject. For example Gilberth (Mr and Mrs) introduced the “Time and Motion studies” to improve efficiency. They classified body movement into basic therbligs such as grasp, reach, bend etc. and explain how efficiency can be improved by careful selection of therbligs.

Henry Gantt propose famous work plan chart known as Gantt chart and explained how they can be used to minimize the time required for completion of a certain task.

Henry Fayol (1841-1925) was another academician who did present more broad base concepts and ideas supplementing Scientific Management.

Henry Fayol identified five functions of a Manager i.e. Planning, Organizing, Commanding, Coordinating and Controlling. He further set out certain guidelines to follow in order to perform these functions effectively.

Principles of Management as Proposed by Henry Fayol

(a) Division of Labour – Work should be divided and subdivided into smallest and feasible elements to take advantage of gains from specialization.


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(b) Parity of Authority and Responsibility – Each jobholder should be delegated with sufficient authority to carry out assigned job responsibilities.

(c) Discipline – Employees should obey whatever clearly stated agreements exist between them and the organization; managers should fairly sanction all instances of breached discipline.

(d) Unity of Command – Employees should receive orders from and be accountable to only one superior.

(e) Unity of Direction – Activities, which have same purpose, should be grouped together and operated under the same plan.

(f) Subordination of individual interests to general interests – The interests of the organization take precedence over the interests of the individual.

(g) Fair remuneration – Pay should be based on achievement of assigned job responsibilities

(h) Centralization – Authority should be delegated in proportion to responsibility

(i) Scalar Chain – An unbroken chain of command should exist through which all directives and communication flow.


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(j) Order – Each job should be defined so that the jobholder clearly understands it and its relationship to other jobs

(k) Equity – Established rules and regulations should be enforced fairly

(l) Stability of Personnel – Employees should be encouraged to establish loyalty to the organization and make long-term commitment

(m) Initiative – Employees should be encouraged to exercise independent judgment within the bounds of their delegated authority and defined jobs

(n) Esprit de Corps – Employees should be encouraged to define their interests with those of the organization and thereby achieve unity of effort.

Behavioral Approach to Management

Where as the Scientific Management approach proposes the ‘Economic man’ concept the Behavioral

approach management proposed the ‘Social man concept’.

Behavioral approach is a development of human relation approach originated from famous “Hawthorn studies”. As a result of studies done at Chicago Hawthorn plant of Western Electrical, it was proposed

that Physical conditions and factors were not an important as the sociological environment of work. The


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factory must be looked not merely as a technical system but also as a social system. In these systems

groups would have its own status, reward, leadership and other informal systems established.The work group had their own informal production targets and decides what the fair days work is. The grievances of workers are entirely different to what the management thought as grievances.

Properly constituted groups could result in higher production and productivity if properly motivated. Thus Hawthorn studies surfaced the human dignity of workers and need for counseling and accepting group behaviour.

The Behavioral approach is a further development of Human relation approach. In this approach, attempts were made to study the behavior more scientifically with the help of Psychology, Sociology and Anthropology.

Behavioral approach emphasis the importance of Values, Norms, Attitudes and Perception of workers. Accordingly it proposes that upliftment of these characteristics in workers in order to achieve organizational objectives more efficiently and effectively.

System Approach to ManagementSystem approach considers any organization as a collection of systems. These systems are made of

interrelated processes and Identifying, understanding and managing this system of interrelated processes for a given objective will contribute to the effectiveness and efficiency of the organization. It should also be emphasized that any organization is a sub-system of its immediate environment, which consists of Economic, Cultural, Social, Educational and Political environment. These again are a subsystem of still larger international environment. Therefore any managerial action should take into consideration the norms, values, rules and regulations of these systems.

Contingency Approach


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Contingency approach simply states that techniques and practices to be adopted depend on the situation and there is no one best way of managing. There are alternative solutions to any managerial problems and one has to adopt method giving optimum results.

Therefore strategic planning approach is vital for arriving at an effective solution to a given managerial problem.

Management Levels and their Scope

In majority of organizations, the structure of the management consists of three levels, commonly known as Top, Middle and Junior level management. Although the functions of any manager are same, their scope and application differs. The variation in nature of functions to be performed by different levels is illustrated in the following diagram.

Type of functions(ability required)


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TOP LEVEL MIDDLE LEVEL JUNIOR

CONCEPTUAL

TECHNICAL

PERSONNEL

CONCEPTUAL

TECHNICAL

PERSONNEL

CONCEPTUAL

TECHNICAL

PERSONNEL



Management Functions

Notwithstanding above explanation, the work content of any manager at any level consists of functions coming under categories of Planning, Organizing, Coordinating and Directing

Planning

Planning is setting out the course of action for the future activities with the objective of

obtaining desired and intended results. It is therefore anticipatory

decision-making process. Planning is necessary as resources are scarce and has to be utilized efficiently and effectively to achieve objectives. In the planning process one decides on the best course of action and allocation of resources (available and acquirable) in order to obtain optimum results with regard to an intended or desired objective. As such Planning involves following steps.

Setting objectives Studying the present state Studying the resources needed and actions to be taken


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EFFECT OF DECISIONS Nature :- Strategic Operational Functional Scope :- Applicable to whole Applicable to Applicable only Organization a Division to a small unit Tenure :- Long term Medium term Short term Resource requirement :- High Medium Low



Setting up systems and procedures to fill the gap Setting up implementation procedure or action plan

Implementation of the Plan and its auditing too can be considered as a part of the Planning process.

In general there are two major types of Planning; Strategic and Operational. Strategic Planning is broad based and concerned mainly with policy matters of the organization. It is long term spanning not less than a year (may be even ten years or more) Strategic Planning is influenced by both internal and external environment and therefore should take into consideration Strength and Weaknesses of the organization as well as Opportunities and Threats of the external environment. (SWOT analysis).

On the other hand Operational Planning is short term ranging from one day to one year and

aimed mainly at increasing efficiency of various departments. While

Strategic planning is a function of Top management, operational planning is done by

middle and junior managers.Compare & Contrast

Organizing

Once an action plan is made it has to be implemented effectively. Organizing is the first step of

implementation. An organization cannot survive unless this function is done effectively. Organizing involves following steps

a) Determination of activities to be performedb) Grouping activities (Departments)c) Assignment of people to perform tasksd) Assign Authority, Responsibility and Accountability

Organizing involves development of proper structure for the business. Some models in this regard are


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Functional organization - Divides the units to perform specific function different from the others

Product organization - Divides the units on the basis of a product/s, project/s or program/s.

Territorial organization - Divides the units on the basis geographic territory

Client centered organization - Divides the units to serve a specific client group

In all these steps, the primary purpose should be efficient and effective implementation of the Plan. In actual practice many often business entities are organized on a Composite structure of the above.

Coordinating

As different parts of a plan are implemented through different people in same or different divisions, it is essential to coordinate these activities to optimize outcome. As much as allocation of functions to

departments is necessary, proper coordination within and between departments too is vital for successful performance. Unless coordination is effective, chaos

will creep in and whole management system will disintegrate. Coordination also helps to prevents sub-optimization in different divisions. Coordination primarily can be of two types viz. Vertical coordination and Lateral coordination. In vertical coordination chain of command, Unity of command and Span of control should be considered for effectiveness. Techniques used in Lateral coordination are Assigning responsibilities to both departments, Creating an intermediary position, Matrix organization and unitary organization


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Controlling (Directing)

Once the implementation of an action plan is commenced, need for controlling too arises.Controlling involves following steps

Setting up targets or desired results (this is usually given in the action plan) Measurement of Actual result or outcome Evaluation of deviation Deciding on a corrective action if necessary Implementation of the corrective action

Some academicians in recent times prefer the term “directing” to “controlling” taking into consideration their literal meanings. In addition the leadership quality of a manager has been brought in as a contributory factor to the efficiency of management through Directing. Directing, represent a more proactive approach where as controlling is associated with more reactive approach.

Decision MakingAnother important aspect in management is decision making. It would be useful at this point to study why and how decision-making should be done.

Decisions had to be made to solve problems. A problem is a situation where there is a gap between the desirable and intended state of affairs and the actual or current state of affairs. Problems are classified in various ways such as the familiarity of the problem and the situation.

Depending on the nature of the problem one can make either a programmed or a Non-programmed decision.


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Programmed DecisionsDecisions based on the prior knowledge and experience of the same or very similar problem. These are routine decisions applicable to routine situations. These decisions can even be documented as routine procedures.

Nonprogrammed Decisions Decisions that have to be made after creative thinking and analysis of a problem

falls into this category. These are usually non-routine and require conceptualization of the

related environment and affairs to achieve at an effective solution. In addition one needs to follow a proper decision making process before arriving at a solution.

There are three basic approaches applied in decision-making. They area) Rational approachb) Incremental approachc) Decisions arrived on Intuition

Compare & Contrast


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Use of Quantitative techniques such as Break-even analysis, Pay off matrix, Decision Tree and Linear programming etc., borrowed from other fields are quite common in present day decision-making.

Incremental Approach


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Rational Approach

Steps as shown in the flow chart are followed in this approach to decision making

The first step in the rational approach is to identify the problem. The problem is then analyzed in detail to identify root causes. A cause and effect diagram may be used here. After this analysis alternate solutions should be collected. A brain storming session may be of use here. Once sufficient alternatives are available, they should be analyzed for efficiency and effectiveness taking into consideration cost and benefits too. Solution which may originate another problem, as they usually do, should be avoided or tackled accordingly. Once the best alternative is selected a strategy for its implementation too, should be prepared.

The rational approach assumes that the decision maker’s behavior is rational and also the company management is progressive. This is more or less a perfect approach and very often time consuming and, a costly procedure. Due to these and certain other reasons, managers tend to adopt short cut procedures more often than not.

Start

Identify the Problem

Analyze the Problem

Evolve alternative solution.

Select the

best solution

Develop strategy

Implementsolution

Problem solved

Yes

End

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The incremental approach to decision making is based on the concept that a state of affairs can be

improved by adding and/or removing little things one by one from the situation. Bad things are removed and good things are added to the system

without changing it drastically. Risk evaders prefer this approach and in addition it is an on-line approach, which may be less costly.

Decisions Arrived on IntuitionA manager might not consider either of the above approach but arrive at a decision by intuition.

“Intuition” is the ability to perceive a state of affairs without proper reasoning but as a result of a vast number of characteristics such as knowledge, experience, belief, confidence etc. It is like the sixth sense, which sees the future. If a decision made by this approach is successful, one may say that the manager who made the decision is lucky. Decision by Intuition is comparable to solving a set of mathematical equations where the number of equations is much less than the number of variables.

Leadership

Much has been written on the subject of what constitutes good leadership but it is true to say that the effectiveness of leaders is best measured by looking at the impact they have on the performance of those they lead. Excellent leadership can deliver results from an organisation well above what could reasonably be predicted; conversely, poor leadership often results in under performing businesses, unhappy employees and highly defensive organizational behaviours.

Leadership is sometimes described as the ability to foster commitment, creativity and productive attitudes in others through effective self-knowledge and interpersonal skills. In short, leadership is the ability to bring out the best in people.

When you look at organizing events it's somebody having so called ‘leadership qualities’, take the initiative. They are the people who are willing to tell other people what to do while maintaining respect of others as well. Others too will follow them, for whatever reason. These Leaders have a clear idea of what they want and why they want it. They also have ability to convince others through effective communication to gain co-operation and support of others to achieve their goals.

But what is it that makes someone exceptional in this respect? It seems to be one of those qualities that you know when you see it, but is difficult to describe or define precisely. Many associate leadership with one person leading. Four things stand out in this respect. i.e.


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First, to lead involves influencing others. Second, where there are leaders there are followers. Third, leaders seem to come to the fore when there is a crisis or special problem. In other words,

they often become visible when an innovative response is needed. Fourth, leaders are people who have a clear idea of what they want to achieve and why.

Thus, leaders are people who are able to think and act creatively in non-routine situations – and who set out to influence the actions, beliefs and feelings of others. In this sense being a ‘leader’ is personal. It flows from an individual’s qualities and actions. However, it is also often linked to some other role such as manager or expert. However not all managers, for example, are leaders; and not all leaders are managers.

In the recent literature of leadership there have been four main ‘generations’ of theory:

Trait theories. Behavioural theories. Contingency theories. Transformational theories.

It is important to recognize that none of the four ‘generations’ is mutually exclusive or totally time-bound. Although it is true that the progression of thinking tends to follow a sequential path, it is quite possible for elements of one generation to crop up in another.

Traits Approach

This approach assumes that leaders are born, not made and members select leaders, not nurture or train them

Surveys of early trait research by Stogdill (1948) and Mann (1959) reported that many studies identified personality characteristics that appear to differentiate leaders from followers. Many have listed a set of traits that are thought to be central to effective leadership. The basic idea remains that if a person possesses these she or he will be able to take the lead in very different situations. An example list suggested is given below

Gardner’s Leadership Attributes

Physical vitality and staminaIntelligence and action-oriented judgmentEagerness to accept responsibilityTask competenceUnderstanding of followers and their needs


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Skill in dealing with peopleNeed for achievementCapacity to motivate peopleCourage and resolutionTrustworthinessDecisivenessSelf-confidenceAdaptability/flexibility

This theory has been challenged in many ways. Points to be considered are; is the list fixed, is the list not susceptible to situation, is the list gender dependent etc.

Behavioural Approach

Once the Traits approach is challenged, researchers turned to what leaders did - how they behaved (especially towards followers). They moved from leaders to leadership - and this became the dominant way of approaching leadership within organizations in the 1950 s and early 1960s. Different patterns of behaviour were grouped together and labelled as styles.

Examples of behaviours noticed are; Concern for task. Here leaders emphasize the achievement of concrete objectives. They look for

high levels of productivity, and ways to organize people and activities in order to meet those objectives.

Concern for people. In this style, leaders look upon their followers as people - their needs, interests, problems, development and so on. They are not simply units of production or means to an end.

Directive leadership. This style is characterized by leaders taking decisions for others - and expecting followers or subordinates to follow instructions.

Participative leadership. Here leaders try to share decision-making with others

Subsequent to the Behavioral approach, very comprehensive research has been done on the interrelationship of behavior, leadership style and management style. For example, Autocrat tends to adopt X type management while Democrat tends to adopt Y type management.


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Tannenbaum & Schmidt defined a continuum of leadership behaviour

Boss Cantered Leadership

Subordinate Cantered Leadership


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Area of Freedom for subordinates

Theory X

Average person has an inherent dislike of work. People must be coerced, controlled, directed, and threatened with punishment. Average person prefers to be directed, and wishes to avoid responsibility.

Theory Y

Physical and mental effort is as natural as play or rest. Man will exercise self-direction for objectives to which he is committed. Commitment to objectives is a function of reward. Average person learns to accept and seek responsibility. Imagination and creativity is widely distributed. People's potentials are only partially utilized.



Manger makes decision and announce it

Manager sells decision

Manager presents ideas and invites questions

Manager presents tentative decision subject to change

Manager presents problem, gets suggestions, makes decision

Manager defines limits; asks group to make decision

Manager permits subordinates to function within limits defined by superior

The continuum of behaviour has following milestones.

Tells: leader identifies problem, chooses a decision, announces to subordinates, no participation Sells: leader chooses a decision but attempts to persuade subordinates to accept it Consults: leader identifies problem, listens to advice of subordinates, chooses a decision Joins: leader defines problem and the limits of possible decisions; the group take decision with leader as

just a member

Three Classic categories of Leaders, defined on the basis of behaviour, are described below.

The Autocrat

The autocratic leader dominates team-members, using unilateralism to achieve a singular objective. This approach to leadership generally results in passive resistance from team-members and requires continual pressure and direction from the leader in order to get things done. Generally, an authoritarian approach is not a good way to get the best performance from a team.

There are, however, some instances where an autocratic style of leadership may not be inappropriate. Some situations may call for urgent action, and in these cases an autocratic style of leadership may be best. In addition, most people are familiar with autocratic leadership and therefore have less trouble adopting that style. Furthermore, in some situations, sub-ordinates may actually prefer an autocratic style.

The Laissez-Faire Manager

The Laissez-Faire manager exercises little control over his group, leaving them to sort out their roles and tackle their work, without participating in this process himself. In general, this approach leaves the team floundering with little direction or motivation.


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Again, there are situations where the Laissez-Faire approach can be effective. The Laissez-Faire technique is usually only appropriate when leading a team of highly motivated and skilled people, who have produced excellent work in the past. Once a leader has established that his team is confident, capable and motivated, it is often best to step back and let them get on with the task, since interfering can generate resentment and detract from their effectiveness. By handing over ownership, a leader can empower his group to achieve their goals.

The Democrat

The democratic leader makes decisions by consulting his team, whilst still maintaining control of the group. The democratic leader allows his team to decide how the task will be tackled and who will perform which task.

The democratic leader can be seen in two lights:A good democratic leader encourages participation and delegates wisely, but never loses sight of the fact that he bears the crucial responsibility of leadership. He values group discussion and input from his team and can be seen as drawing from a pool of his team members' strong points in order to obtain the best performance from his team. He motivates his team by empowering them to direct themselves, and guides them with a loose reign.

However, the democrat can also be seen as being so unsure of himself and his relationship with his sub-ordinates that everything is a matter for group discussion and decision. Clearly, this type of "leader" is not really leading at all.

Managerial Grid

Blake & Mouton (1964) and Likert (1961), use a two dimensional grid to define a set of leadership styles.

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ConcernForPeople

1

X X

X

X X

1 Concern for production 9


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(1,9) Country club management(9,9) Team management(5,5) Middle of the roader(1,1) Impoverished management(9,1) Authority compliance



Leadership and Power

Ownership of following powers would be useful for a leader to be effective.

Reward power: ability and resources to obtain rewards for those who comply, e.g. pay, promotion, recognition, privileges.

Coercive power: ability to punish or to bring about undesirable outcomes, e.g. withholding pay rises & promotion, withdrawing friendship, formal reprimands

Legitimate power: the right to exercise power because of leader's position in the organisation

Referent power: subordinate's identification with the leader because of attractiveness, reputation, or charisma

Expert power: competence, special knowledge or expertise in a given area. Expert power is normally limited to narrow, well-defined areas or specialization


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